Credit unions offer best rates

Credit unions are cashing in on the opportunity to snag business from other lenders in the wake of three big banks and one monoline announcing rate increases last week.

“While some Monolines are 3.79 per cent on a five year fixed; DUCA Credit Union is advertising 3.29 per cent on RateSupermarket,” Ron Butler of Verico Butler Mortgage told MortgageBrokerNews.ca. “And as of last Thursday Meridian Credit Union was offering the same rate 3.29 per cent to Brokers at a reduced commission.”

At the time of press, DUCA offers the best five year fixed rate – holding on to the 3.29 per cent rate with a rate hold of 90 days according to RateSupermarket.ca.

Deepak Bansal of Dominion Lending Centres Mortgage Village has taken advantage of the low rates by submitting a deal through DUCA late last week. He also has two pending deals for first time buyers that are interested in getting into a fixed rate before they inevitably increase.

“I am using the credit unions more to recommend to clients because their rates are so low,” Bansal said. “I’m noticing, on average, 30 basis points difference.

“It’s not always the credit unions who raise their rates last,” Bansal added. “But generally, they follow the banks and monolines; how much later it differs -- it can be days or weeks. Right now we’re at a week.”

While Bansal admits rate isn’t everything, if the credit unions offer a competitive product at a better rate than the monolines or big banks, he will recommend them to clients looking for fixed rate mortgages.

“It’s good for us and for our clients because we still have competitive rates to offer,” Bansal said. “It’s not all about rate, though: if the product is good for the client I will recommend one of the fixed rate options that the credit unions have. It has to be the right product, though.

“I’m going to look at DUCA, for example: I make sure the bells and whistles they have are what the client is looking for. If the client is comfortable with the credit union and like the features, I will recommend them.”

While they aren’t always the last to raise their rates, credit unions are known to lag slightly behind their industry counterparts. Brokers expect low rates from the credit unions to last another week or so.

I hope Brokers will inform the clients a) Credit Union mortgages are not Portable out of Ontario. So pay the Penalty.b) CU mortgages are closed mortgages . Can be paid off only if property is sold - Arm's length.c) some CU won't allow property be rented out during the Term . So job change -out of province - can't port , can't rent. sell and pay penalty.

don't keep clients in dark . Disclose.

Danielle Nielsenon
2013-08-27 10:14:57 AM

In response to Joe Wyman:a) Credit Unions can only lend in the Province in which they have a bond. If the CU is in on Ontario, then they can only lend within Ontario etc. so no you cannot port out of province.b) Credit Union mortgages are NOT closed mortgages. They can be paid off in the same way as the banks or monolines.c) Credit Unions most definitely allow property to be rented our during the terms, same as banks and monolines.

So no you can't port out of province, but you CAN rent and you DON'T have to sell.

I just wanted to clarify as I have been working for Credit Unions for 15 years in Management and I didn't want any misinformation out there.

Absolutely disclose to your clients :)

CU Brokeron
2013-08-27 10:25:32 AM

"CU mortgages are closed mortgages. Can be paid off only if property is sold - Arm's length."

That is a very general and misleading statement.

Please name 3 major credit unions that have this policy in Ontario.

John Dearinon
2013-08-27 10:29:58 AM

Local credit union in St. John's NL would not allow a client to refinance even in house, locked in for 5 years only get out on arms length sale. So each CU has different rules.

Danielle Nielsenon
2013-08-27 10:40:11 AM

With all FI's, CU's and monolines included, there are sometimes specials where they offer a very low rate but with strict terms and conditions such as the mortgage being closed.